2. By recognizing rentals as equipment sales in the current period, does this increase or decrease Xerox’s sales revenue in the future period?
Since such creative accounting is basically moving up future revenue boost current revenue, Xerox’s revenue in future periods is expected to decrease. If dealt properly, Xerox would have recorded revenue by $10 each month However, if Xerox records it
2. By recognizing rentals as equipment sales in the current period, does this increase or decrease Xerox’s sales revenue in the future period?
Since such creative accounting is basically moving up future revenue boost current revenue, Xerox’s revenue in future periods is expected to decrease. If dealt properly, Xerox would have recorded revenue by $10 each month However, if Xerox records it
creditors to extend loans in excess of $415 million to him meaning that he put his company at risk of losing that amount.
If the price of the stock declined, and Mr. Ebbers did not meet margin calls, his creditors would be forced to sell the shares, among them, 27 million were possessed by Mr. Ebbers.
Despite those issues, Mr. Ebbers was “a wonderful corporate citizen”, he for example raise
CREDITORS, THEIR REQUIRED RATE OF RETURN ON EACH UNIT FALLS AS THE AMOUNT OF EQUITY RISES, SINCE PROFITS AFTER INTEREST BECOME LESS VOLATILE. THE COST OF DEBT FALLS TOO, SINCE CREDITORS HAVE A BIGGER BUFFER BENEATH THEM. THE FIRM’S BLENDED COST OF CAPITAL IS UNCHANGED, AND IS DRIVEN LARGELY BY THE RISK OF THE FIRM’S ASSETS, NOT HOW THEY ARE PAID FOR. AT THE EXTREMES, IT CAN BE VERY LOW. A FIR